The view from Malawi

The past couple of weeks have been tumultuous ones for Malawi. I am here with ETP’s African team, international buyers and retailers of Malawian tea, and one of ETP’s key development partners, IDH –the Sustainable Trade Initiative. This is a trip that has been long planned but we came close to cancelling it due to concerns that violence would erupt after allegations of electoral fraud in the recent elections.

While all our initial meetings began and ended with a discussion of what was happening with the election results and parts of the country were very tense, overall the country remained calm. The winner of the election was finally declared, more than a week late, while we were in one of the tea areas. The new president comes from a tea region so there was a lot of singing, dancing and shouts of chala mwamba in the surrounding villages that night. Our subsequent meetings in Blantyre have had to be planned carefully to take account of the blue – painted presidential supporters who have been streaming into the city for his inauguration.

All the discussions about the priorities of the different political parties and the implications for the future of Malawi have sharpened the focus of our work here. Malawi is Africa’s largest tea producer, after Kenya, and one of the world’s poorest countries. 62% of Malawians live below the World Bank’s extreme poverty line, and approximately half of children are stunted. The tea industry is the biggest employer, in a country where jobs are scarce – with only 6% people in rural Malawi having waged work.

Consequently, the Malawian tea sector is one where the challenges of sourcing from a very poor country collide headlong with international norms of ensuring that the people who produce the goods and services we all consume can live dignified lives. So while tea estate jobs are good jobs in Malawi, paying above the minimum wage and providing a range of other benefits, standards of living are very low when viewed from the outside, as outlined in our research report Understanding Wages in the Tea Industry, which covered key countries in Asia and Africa.

ETP have been grappling with this challenge for several years now, working with Oxfam to lead a coalition of companies, certification organisations, and development partners committed to supporting change towards a living wage.

The research we commissioned in 2011 identified systemic problems locking in low wages: pay is set at national or regional level; wages are influenced by government policies to maximise rural employment reducing employers’ ability to manage productivity and costs; “in-kind” benefits can form a big share of workers’ income, but these vary significantly between estates; and most workers have little say in pay and benefit negotiations. The report also found that there was no difference in wage levels between certified and non-certified estates.

Since then, ETP and Oxfam have been working closely with the Malawian industry, Ministry of Labour, tea buyers and retailers, wage experts, unions, certification organisations and NGOs to assess its implications and the way forward.

One of the key strands of work is to improve worker representation in the wage-setting process. Oxfam convened a number of meetings in Malawi, which led to the establishment of the Task Force for Collective Bargaining. The Task Force is chaired by the Malawi Ministry of Labour and includes the Malawi Congress of Trade Unions, the Plantation Agriculture Workers Union and the employers associations, the Tea Association of Malawi, and ECAM.

ETP and Oxfam also helped facilitate the recent work by wage experts Richard and Martha Anker to develop a living wage benchmark for Malawi, funded by Fairtrade, Rainforest Alliance, and Utz Certified. Encouragingly, they found that after eight years of little change there have been significant rises since 2012, concluding that, “Although there is still far to go before workers on tea estates receive a living wage, tea estates have made significant progress in recent years to improve wages of workers.”

We have spent the past week in the tea areas of Malawi, meeting with estate staff, smallholder farmers, the Tea Association of Malawi, workers, trade unions, and NGOs, discussing how the tea value chain can work together and with other stakeholders to continue to make progress.

What gives us most hope for the future was the willingness to discuss openly the difficult challenges and dilemmas that we all face. Malawi is not an easy place to do business and margins in the tea business are not high. Mechanisation, which is increasing across tea production in Africa, is being trialled in Malawi and everyone is grappling with how to balance employment levels and quality of life for workers with production costs and the need to ensure that Malawian tea remains competitive.

There are a range of different activities that the tea value chain and development partners such as IDH and GIZ, Oxfam, unions and certification organisations can work together to make a difference in Malawi including:

Assisting tea estates to improve their quality, productivity and profits, making more finance available for investment and providing business support, linked to a commitment to raise wages;

Working with employers, unions and governments to improve the process by which wages are set, increasing worker representation and agreeing phased improvements;

Training smallholders in good farming practices and giving them access to affordable finance so they can improve quality and productivity;

The last word should go to Peter Stedman, who now manages responsible sourcing for Tesco but previously worked in Malawi at one of the large tea estates. “It’s been a privilege to return to a country and sector that I love with ETP and IDH. This trip has reinforced all the reasons why Tesco joined ETP. The skills and influence that we have within the extended team of ETP staff, member companies, and development partners is unparalleled and really demonstrates how we can use our skills and scale for good. We’re leaving Malawi with a shared vision of the way forward with producers and I am confident that the programme we develop with them will lead to positive change for the Malawian tea industry and those who work in it.”